Tech Talk for Wednesday March 18th 2020

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Pre-opening Comments for Wednesday March 18th

U.S. equity index futures were lower this morning. S&P 500 futures were limit down 92 points in pre-opening trade. Investors responded to news that COVID 19 infections in the world exceeded 200,000.

Early weakness partially was prompted by a $19.64 drop in Boeing to $104.50.

Index futures were unchanged following release of February Housing Starts at 8:30 AM EDT. Consensus was a decrease to 1.502 million units from an upwardly revised 1.624 million units in January. Actual was 1.599 million units.

The Canadian Dollar was virtually unchanged following release of Canada’s February Consumer Price Index at 8:30 AM EDT. Consensus was an increase of 0.4% versus a gain of 0.3% in January. Actual was an increase of 0.4%.

WTI crude oil dropped $ 2.25 to a 17 year low at $24.70 per barrel. The energy sensitive Canadian Dollar dropped 0.72 to U.S. 69.69 cents

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FedEx (FDX $94.96) reported higher than consensus fiscal third quarter earnings. However, the company withdrew guidance due to uncertainties related to the coronavirus.

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General Mills dropped $2.17 to $57.50 after reporting lower than consensus fiscal third quarter revenues.

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EquityClock’s Daily Market Comment

Following is a link:

http://www.equityclock.com/2020/03/17/stock-market-outlook-for-march-18-2020/

Note seasonality chart on U.S. Retail Trade.

 

Trader’s Corner

Equity Indices and related ETFs

Daily Seasonal/Technical Equity Trends for March 17th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Commodities

Daily Seasonal/Technical Commodities Trends for March 17th 2020

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Green: Increase from previous day

Red: Decrease from previous day

 

Sectors

Daily Seasonal/Technical Sector Trends for March 17th 2020

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Green: Increase from previous day

Red: Decrease from previous day

S&P 500 Momentum Barometer

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The Barometer improved 2.81 to 4.61 yesterday. It remains deeply intermediate oversold and showing early signs of bottoming.

 

TSX Momentum Barometer

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The Barometer improved 3.93 to 3.93 yesterday. It remains deeply intermediate oversold and showing early signs of bottoming.

 

Disclaimer: Seasonality and technical ratings offered in this report and at

www.equityclock.com are for information only. They should not be considered as advice to purchase or to sell mentioned securities. Data offered in this report is believed to be accurate, but is not guaranteed

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10 Responses to “Tech Talk for Wednesday March 18th 2020”

  1. Canuck2004 Says:

    Another big down day…nibbling here and there on my stronger names in margin account. RRSP and TFSA dividends in for mid month so nothing I can do there until end of month when next cash flow comes in.

    I live in Victoria BC for 6 months in the summer and Mesa, Arizona 6 months in winter. Own homes in both places. Currently I am in my winter home in Mesa, overlooking the 17th fairway with a nice view of the Superstition Mountains. Many Canadians heading home in a panic…don’t know why when COVID-19 cases in AZ are about 20 and BC close to 200…lol…just silly.

    My health insurance was bought back in October so still valid as it was before the virus and we had confirmation via email that it was still valid. Panic buying in grocery stores here, but the same in Canada and around the world so no difference. Not planning to return until my usual return date of April 21….remaining here to enjoy the weather. Weak CAD no issue for us.

    H1N1 in 2010 was much worse than this, but no panic that I remember….must be sun spot activity or something making people crazy…right out of Mackay’s book. They should shut the markets down for a week like in 9/11 to calm trading down some…

    Anyway very busy here with life so cannot do more than pop in for a few minutes here and there…. unless something more extreme happens in markets, probably won’t be back for a while. Nothing more to add.

  2. Ron/BC Says:

    Big test of the broad market using the $SPX ETF:XSP.to that trades on the $TSX. I’m just using CD$ with my speculative cash as I don’t like to risk my U.S.$ in my RIF at a questionable time. Price is now testing the Dec 2018 low support at 25.79 and very oversold with positive divergences on the RSIs. This price point is also a Fibonacci retracement of the 2009 to 2020 high. It is also the uptrendline from the entire bull market from the 2009 low. This is also a large “M” pattern from early 2017. Bottom line is : A clear break of this price level of 25.79 that holds below would suggest more downside and sideways price action for some time and this present support level would then become major resistance on a rebound. “IF” this level fails I’ll exit with a small loss and leave the market alone until I see this price point cleared again.

    https://stockcharts.com/h-sc/ui?s=XSP.TO&p=W&yr=20&mn=0&dy=0&id=p44317758554&a=719734169

  3. Ron/BC Says:

    Here is the $SPX Daily chart going back to 2000. I have read that the uptrendline from 2009 has been broken. I recall spending hours studying trendlines decades ago when getting charts weren’t so easy, and a comment by a well known expert on charting said not to use a sharp pencil to draw a trendline, but to use a crayon. His point was a trendline is not an exact measurement but an ‘average’ price pattern of the trend and can be drawn by several chartists and all be different especially the further out of the time measured. So while important it is never an exact price point. What makes a trendline especially important is when it lines up with a previous price point support or a Fibonacci retracement level or a major moving average. So bottom line: This price point at 2351 needs to hold to suggest the selloff has stabilized and prices should recover. And like all breakdowns or breakouts a 2 or 3 day break must continue in that direction to confirm that direction is valid as many respond immediately to a break only to see price reverse with strong volume.
    Now I have some painting to do in my condo to continue to increase its value.
    (More than one way to skin a cat.)

    https://stockcharts.com/h-sc/ui?s=%24SPX&p=D&yr=20&mn=6&dy=0&id=p01836821614&a=673066391

  4. Mary Says:

    Can someone please interpret this language. Thanks.

    QUESTION: Marty; it all seems to be setting up for your forecast back to new high into 2022. Even the inflationary wave seems oddly reminiscent of 1979 with people hoarding toilet paper again. Is everything still on track?

    ANSWER: Yes. As you know, the Global Market Watch is dynamic. So the yearly will change with the market. We have gone down enough in the Dow Jones Industrials for it to come up with a pattern that calls this an Important Reaction Low. If we go further, it may change to a Knee-Jerk Low. I suggest following that in Socrates. The inflation was showing more between 2022-2024. The Silver/Gold Ratio was warning this was not ready to breakout.

    The correction came in on a target from the ECM turn on January 18th, 2020. It was the 21st when Ray Dalio said “cash is trash” which was perfect. The target we gave back at the WEC in October for the correction in January was a minimum correction in the Dow to 21600. So that has been met and now we are fooling around with the Monthly Bearish Reversals below that target.

    Ironically, the more pronounced the decline, the higher the probability for the slingshot. You need to create that energy. Government bond markets are collapsing so the traditional flight to quality is a dead issue. There is a panic to dollars right now. This is rising as fears over canceling currencies in Europe and bank holidays.

  5. Larry/ON Says:

    Managed to get my family back from Europe on Monday after quite a bit of chaos buying my ticket back right at the Vienna airport before departure. What an absolutely ugly market. We are in quarantine and my daughter and her husband are about to arrive from Berlin and start their quarantine. Eventually the world will get through this but it’s obviously full of the unknown. I just got an invitation from my bank offering a mortgage renewal to lock-in almost 6 months in advance. They must be expecting interest rates to drop even further. My wife is preparing her family practice office for telemedicine. I’m getting anecdotal news the some physicians have closed their offices and are only dealing with patients by phone or video.

  6. Canuck2004 Says:

    I forgot: Ross Healy’s Market Outlook.

    Another brutal day….must be getting near the end I suspect. This show was on Monday. He has always been correct on the big picture….but his picks not always so good. However, pay particular attention to his take on Financials. I agree 100% with him there, as I have seen this scenario play out many times in the past 40 plus years. You cannot have a recovery without the participation of the financials.

    Full episode: Market Call Tonight for Monday, March 16, 2020

    https://www.bnnbloomberg.ca/market-call-tonight/full-episode-market-call-tonight-for-monday-march-16-2020~1920254

    P.S: We were planning to go to Italy this September but I guess that won’t happen this year….lol

  7. Canuck2004 Says:

    Oil prices could fall below zero: Analyst

    https://www.foxbusiness.com/markets/oil-price-could-fall-below-zero-analyst

  8. Bernie Says:

    dave/ab

    I shouldn’t have referred to SPY & TLT as polar opposites as they do sometimes track in the same direction for a short period of time, like now. TLT has had more downside than upside since Mar 9th. I have no way of knowing the duration of the down trend but feel confident in holding a TLT/SPY mix long term if I can incorporate it into my portfolio. I won’t give up my core dividend growth stocks but could trim some of my ETFs. End-all I want to maintain a portfolio yield in the 4% to 4.5% range with a set it and forget it mix. I don’t wish to trade, I’m not good with it.

    I tinkered around a bit more today with various mixes of SPY/TLT, VTI/TLT and SPLV/TLT using the Backtest Portfolio tool within “Portfolio Visualizer”. I wanted to determine the optimum mix within each grouping, ie; the best combination of (A) CAGR, (B) Stdev, (C) Best Year, (D) Worst Year, (E) Max Drawdown and (F) US Mkt Correlation. I feel the best mix for each security group were:

    Spy(40%)/TLT(60%) A= 9.01%, B= 8.20%, C= 21.76 (2014)%, (D)=-2.79% (2018), (E)=-15.87%, (F)= 0.33%

    VTI(45%)/TLT(55%) A= 9.36%, B= 8.04%, C= 21.57 (2019)%, (D)=-3.23% (2018), (E)=-15.90%, (F)= 0.48%

    SPLV(70%)/TLT(30%) A= 11.09%, B= 7.73%, C= 23.58 (2019)%, (D)=-0.61% (2018), (E)=-7.62%, (F)= 0.43%

    The SPY/TLT and VTI/TLT test periods were (Aug 2002-Feb 2020). The test period for SPLV/TLT was much shorter at (Jun 2011-Feb 2020) due to SPLV’s inception date of May 05, 2011. I wanted to link the Portfolio Visualizer test data & results but wasn’t able to save them because this is now only available to subscribers. I was able to save the images via “print screen” but couldn’t figure out a way to copy the images into this posting.

    Attached are links to basic long term weekly graphs of SPY/TLT, VTI/TLT and SPLV/TLT. I wanted to display the negative correlation of each grouping. https://stockcharts.com/h-sc/ui?s=TLT&p=W&st=2002-07-22&id=p05095137794
    https://stockcharts.com/h-sc/ui?s=TLT&p=W&st=2002-07-22&id=p89686404128
    https://stockcharts.com/h-sc/ui?s=TLT&p=W&st=2011-05-05&id=p95800876957

    Its quite apparent that there is little volatility in Low Volatility SPLV lol, much less than there is in TLT. Its a shame the back tests couldn’t be done over a longer time frame to see how the SPLV/TLT relationship would fare through a significant recession.

  9. dave/ab Says:

    Hi Bernie

    Thank you so much for the leg work on the charts comparisons. Very useful. I am keen on SPLV. The dividend rate is very acceptable. I agree https://www.portfoliovisualizer.com/backtest-portfolio has its limits for non-subscribers. When I use it I tend to use a sniping tool to capture it. But then on here you can’t display it.

    I read a ETF doomsday article a while back. The article comments about the pitfall of a market correction if money managers have to unwind units of the ETF during a market correction. Did you or anyone read or seen anyone else making reference to something like this?

  10. Bernie Says:

    dave/ab,

    No, that one is foreign to me but I tend not to read “doomsday” articles. Lots of them lately.

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